What the act requires
The Trade Agreements Act, together with the federal procurement rules that carry it out, generally limits covered federal purchases to products from the United States or from designated countries, a group that includes countries party to certain trade agreements with the United States as well as some developing countries. Products from countries outside that group, including China and India, generally cannot be offered under covered contracts. The rules apply to many contracts above a dollar threshold that is set and adjusted under the trade agreements, and they are standard in GSA Schedule contracts. They are separate from the Buy American rules, which use a different test and apply in different situations.
How origin is decided
Under these rules, a product's origin is generally where it was wholly made or, if components came from several countries, where it last underwent substantial transformation into a new and different article. Simple assembly, packaging, or loading software may not be enough. CBP issues final determinations of origin for government procurement purposes at the request of an interested party, and those determinations, along with court decisions, show how the test is applied to specific products. Supplier certifications are a starting point, but contractors often need supporting information about where key components were made and what work was done where.
Risks and reviewing compliance
Offering a non-compliant product under a covered contract can lead to contract remedies, suspension or debarment, and False Claims Act cases, which are sometimes brought by competitors or former employees as whistleblower suits. Many problems arise when a manufacturer moves production, changes a supplier, or relabels a product without telling resellers. If you sell to the federal government, we review the product list, the certifications you have made, and the supply chain records behind them. Where a problem is found, the options can include correcting the offering, a disclosure to the agency, which is sometimes required, or requesting an origin determination for future sales, and the order of those steps matters.
